Renewable Energy Mandates Same As A Tax On The Poor

  • Date: 25/03/16
  • Robert Bryce and Jonathan Lesser, Orange County Register

If liberals in California and elsewhere were truly interested in the fortunes of the poor and the struggles of the middle class, they’d be striving to make energy cheaper. Instead, the policies that they and their allies at Greenpeace, Sierra Club, and elsewhere are promoting – namely, that renewable energy, and only renewable energy, is acceptable regardless of the cost – are doing the exact opposite.

California has long been one of America’s most liberal states. But when it comes to energy costs and their effect on low-income residents, the Golden State’s climate change policies are decidedly illiberal.

Indeed, the dirty secret of California’s headlong rush toward lower carbon-dioxide emissions and renewables is that the state’s wealthiest residents – who generally live in coastal areas where air-conditioning demand and, therefore, electricity use, is lowest – are shouldering less of the burden than Californians who live in inland locales that are hotter and generally poorer.

For example, in 2013, the average summer electric bill for a household in Hanford, an agricultural town in King’s County – located in the San Joaquin Valley and one of the poorest counties in the state – was over $500 per month. Meanwhile, in Mill Valley, located just north of San Francisco in wealthy Marin County, the average bill was just over $200. Thus, in Kings County, where the median household income is $48,133, residents are paying more than twice as much for electricity in the summer as are residents of Marin, even though the median household in Marin, according to the Census Bureau, has an annual income of $90,839, a level that is 89 percent higher than the median in Kings County.

In short, California’s renewable energy mandates and climate change policies may make wealthy coastal residents feel virtuous, but those policies are having a disproportionate economic impact on the poor.

The regressivity of California’s energy policies are the focus of our new report for the Manhattan Institute, which found that, in 2012, about 1 million California households were living in “energy poverty,” a term that applies to residents who spend 10 percent, or more, of their income on household energy costs, (excluding the costs of transportation-related costs, such as gasoline.)

We also found that the highest rates of energy poverty are occurring in the most economically depressed areas of the state – the inland counties that largely depend on agriculture. For example, 15 percent of all Tulare County and Madera County households experienced energy poverty in 2012. So did 14 percent of all Imperial County households. By contrast, in the wealthy coastal counties and in Silicon Valley, energy poverty rates averaged between 3 and 4 percent.

Energy poverty is pervasive in the inland counties not only because they tend to be economically depressed, but also because the climate is less hospitable, with summer temperatures often exceeding 100 degrees. For lower-income households, that means big summer electric bills in order to keep cool, thanks to California’s tiered-rate system, which is designed to reduce electric consumption. For the largest residential electricity users, summer rates can be over 40 cents per kilowatt-hour.

Californians already pay some of the country’s highest electricity prices. But the full impact of the state’s renewable-energy mandates – which require one-third of the state’s electricity be produced from renewable sources by 2020 – has yet to be felt. Today, the state is getting about 20 percent of its electricity from renewables. Obtaining the remaining 13 percent will require increased reliance on wind and solar energy, which are more costly than conventional generation and will require billions of dollars in upgrades to transmission and distribution systems. upgrades.

California is further hurting the climate cause by shutting down its nuclear plants, facilities that have provided decades of power that was both baseload and low-carbon, the daily double of electricity generation.

How expensive will the renewable mandates be? A 2009 study by the California Public Utilities Commission estimated the state would have to spend about $115 billion on new infrastructure to meet the 33 percent-renewable goal by 2020. That amounts to about $2,900 for each Californian.

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